Starbucks were entering the Brazilian market many years after other American franchise corporations like McDonald's and Pizza Hut, but what can we learn from them?
You might have already guessed that this article isn't going to be about coffee nor do I have any inside information from the Starbucks HQ. However, we will look at what your company can learn from this large foreign brand that entered the market over the last 4 years.
1. It's not too late
From time to time, you hear people saying that if you are thinking about entering the Brazilian market now, you are too late. They are wrong, and Starbucks have demonstrated this.
An American corporation trying to sell coffee to Brazilians is almost as ambitious as trying to sell sand in Sahara. However, Starbucks have managed to win a market segment that was not facilitated by the existing coffee franchises like Fran's and Ponto Caffe.
Starbucks announced their entrance in the Brazilian market on June 2006.
2. Study the Viability
Brazil is well known as the land of coffee but Brazilians do not love coffee. The coffee you normally buy in Brazilian coffee shops is normally of a low quality and poorly prepared by unskilled staff.
It is indeed possible to find a few good coffee shops with "export grade" coffee and where the barista and busboy are not the same person, but it's fair between them.
In Brazil, coffee is consumed more as a soft drink, while in other places of the world coffee is consumed as an aromatic experience more than a drink. The Brazilians way of drinking coffee fits well into Starbucks' highly milk and cream based product line.
3. Localize, Localize, Localize
We have been writing about localization before, in the article "Localizing your Software for Brazil". Starbucks have executed the localization excellently without changing the product's experience.
Starbucks have localized their traditional cappuccino with a "doce de leite" edition. Doce de leite is a traditional Brazilian cream made out of milk and sugar, not unlike caramel syrup.
The objective fact that the taste of caramel syrup and doce de leite is identical when you mix it in a cappuccino is irrelevant, what Starbucks understood was the marketing value of doce de leite. This is a cream that most Brazilian where eating as kids and with which they had a lifelong relation. By linking the famous Starbucks Cappuccino with a traditional product, they created a true local touch to their product.
Starbucks could have chosen to simply offer their cappuccino with caramel syrup in Brazil just like they serve it all around the world, after all the taste of cappuccino with caramel syrup and cappuccino with doce de leite is identical.
4. Select your Human Resource carefully
Close to all companies or business concepts that work abroad, it will work in Brazil as long as you hire the right people and accept to localize your offering. Sometimes foreign businesses understand better what's wrong with the current Brazilian offering than their local competitors.
Starbucks have managed to differentiate themselves from their competitors through hiring the right people.
Brazilians are warm people and their loyalty to individuals that are warm and friendly is remarkable. However, at most Brazilian coffee shop chains you will find staff that couldn't care less about being friendly, they see their job strictly as collecting money for filtering water trough coffee and the coffee shops have a high turnover rate on their staff.
Starbucks addressed this by hiring and training the friendliest staff from all the large coffee shop chains in Brazil. They are earning their investment in human reasoners back with the Brazilians loyalty to friendly service.